1. Establish ownership of the process 2. Establish workflow boundaries 3. Define the process
4. Establish control points 5. Implement measurements 6. Take corrective action
Melan also strongly stated that the implementation of process manage- ment has the potential to yield operational improvements and should not be underestimated.
In 1997, researchers Detoro and McCabe defined business process management as the organizational improvement approach of the 1990s.17 The current or functional view, as defined by Detoro and McCabe, is that a traditional organization is managed hierarchically; there is a chain of command where information flows upward to senior functional managers who evaluate the data, make decisions, and deploy policy and commu- nications downward. Cross-functional issues are rarely addressed effec- tively and, consequently, the per formance of the organization is suboptimized.
Future organizations, they said, will rely more heavily on horizontal, or business process management. In horizontal management, the organi- zation is viewed as a series of functional processes linked across the organization, which is how work actually gets done. Policy and direction are still set at the top, but the authority to examine, challenge, and change work methods is delegated to cross-functional work teams. This
“re-viewing” is the process of re-orienting the organization toward business processes.
Detoro and McCabe suggested that business process management solves many of the suboptimization problems in traditional structures because it focuses on the customer, manages hand-offs between functions, and avoids turf mentality because employees have a stake in the final result and not just what happens in their departments.
BPO, as defined by Detoro and McCabe, appears to be the restructuring and reviewing of the organization toward process, teams, and outcomes.
History of Business Process Orientation 31
customer an informed consumer, and brought us into a new economy, the “digital economy,” with new rules and new realities.
The Internet has the capacity to change everything and is doing so at a far greater speed than the other “disruptive” technologies of the 20th century, such as electricity, the telephone, and the automobile. “In five years time, all companies will be Internet companies or they won’t be companies at all,” says Andy Grove, chairman of Intel.18
What is causing this major change in the way the world works? The list is long and somewhat speculative at this point, but some factors are becoming clear. The new assets are not factories, machinery, or raw materials but information, knowledge, relationships, and connectivity.
Location, or “place” in the 4P marketing language, is becoming almost irrelevant and might be replaced with “perfection.” “How you gather, manage and use information will determine whether you win or lose,”
says Bill Gates of Microsoft.19
Having information available to every customer, when and where they want it, at a cost affordable by almost everyone has dramatically shifted the balance of power and customer expectations. Customers, both end consumers and intermediaries, are expecting dramatically more: more information, more speed, more flexibility, more cooperation/collaboration, and more service. They are also expecting less: lower cost, less paper, fewer mistakes, fewer hassles. In the digital economy, they have the power to demand it all. Meeting these expectations and demands places a tremendous strain on our systems, people, organizations, and processes and has fundamentally changed the balance of supply and demand.
Customers are in charge and information is the power. Understanding and leveraging this is the imperative for survival in the digital economy.
In a presentation to Wall Street analysts, Lou Gerstner of IBM described the new “dot-com” companies as “fireflies before the storm—all stirred up, throwing off sparks.” But he continued, “The storm that’s arriving—the real disturbance in the force—is when the thousands and thousands of institutions that exist today seize the power of this global computing and communications infrastructure and use it to transform themselves. That’s the real revolution.”20 This means building the e-corporation.
What does this mean for business process orientation? As the e-forces compel the corporation to perform at even greater levels and focus outward on the customer, there can be no effort that is not value-added.
With effortless globalization enabled by the Internet, competition increases exponentially. There can be no such thing as internally focused people and functional processes that bring little or no value to the customer. The only way to compete in this e-world is to become horizontal or business process oriented.
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For example, hundreds of companies are now forming that exist solely around a business process: e-procurement. This totally business process–
oriented organization can operate at efficiencies that are 10 to 20 times those of the functional, internally focused model. These are only the first of the many BPO e-corporations yet to come.
What do these e-corporations look like? Figure 2.6 offers one possible view.
This totally horizontal view ignores traditional ownership boundaries and geographies. This view could include hundreds of legal entities and span the globe. The functions only exist as competency centers and these could also be different legal entities. The leadership is in the form of a team representing the stakeholders: the legal shareholders as well as customers, suppliers, and participants in the e-corporation.
It is apparent from this brief description and view of the e-corporation that BPO is the fundamental orientation guiding the building and opera- tion. Therefore, defining, measuring, and exploring the impacts of BPO become even more important today.
SUMMARY
The BPO commonalties in the literature appear to be centered on a
“process culture” with structures and systems consistent with that culture.
Figure 2.6 The BPO E-Corporation
History of Business Process Orientation 33
A “systems” approach is also clearly a common component of BPO as is the integration of the entities outside of the formal organization (suppliers and customers). The literature stresses that customer focus is a strong part of this “process culture.”
A “business process culture” is a culture that is cross-functional, cus- tomer oriented along with process and system thinking. This can be expanded by Davenport’s definition of process orientation as consisting of elements of structure, focus, measurement, ownership, and customers.
Commitment to process improvement directly benefits the customer and business process information-oriented systems as a major component of this culture.
A culture of “teaming” and empowerment is critical for the practice of a business process orientation. This teaming culture consists of empowered individuals focused on customer value and continuous improvement of both results and processes. Integrating mechanisms such as teaming, reward systems, and information are also key elements driving business process orientation.
Finally, both cross-functional and outcome-oriented process thinking is needed. A process-driven organization can be characterized by such major components as business processes, jobs and structures, management and measurement systems, and values and beliefs.
NOTES
1 Payne, A. F. Developing a marketing-oriented organization, Bus. Horizons, May–June, 1988, pp. 46–53.
2 Porter, M. E. Competitive Advantage: Creating and Sustaining Superior Performance, New York, The Free Press, 1985.
3 Walton, M. The Deming Management Method, New York, Perigee Books, 1986.
4 Davenport, T. H and Short, J. E. The new industrial engineering: Information technology and business process redesign, Sloan Manage. Rev., 31, 1990, pp. 11–27.
5 Hammer, M. and Champy, J. Reengineering the Corporation: A Manifesto for Business Revolution, New York, HarperBusiness, 1993.
6 Drucker, P. F. The New Realities, New York, Harper & Row, 1989.
7 Walton, M. The Deming Management Method, New York, Perigee Books, 1986.
8 Imai, M. Kaizen: The Key to Japan’s Competitive Success, New York, McGraw–Hill, 1986.
9 Drucker, P. F. The coming of the new organization, Harvard Bus. Rev., Jan.–Feb., 1988, pp. 45-53.
10 Hammer, M. Reengineering work: Don’t automate, obliterate, Harvard Bus. Rev., July–August 1990, pp. 104–112.
11 Davenport, T. H. Process Innovation: Reengineering Work through Information Technology, Boston, Harvard Business School Press, 1993.
12 Coombs, R. and Hull, R. The wider research context of business process analysis.
(Working Paper) Center for Research on Organizations, Management and Technical Change, Manchester School of Management, Manchester, U.K., 1996.
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Melan, E. H. Process management in service and administrative operations, Qual.
Prog., 1985, pp. 52–59.
17 Detoro, I. and McCabe, T. How to stay flexible and elude fads. Qual. Prog.,Vol. 30, March 1997, pp. 55–60.
18 Staff, The net imperative, The Economist, June 26, 1999.
19 Gates, B. Business @ the Speed of Thought, New York, Warner Books, 1999.
20 Staff, The real revolution, The Economist, June 26, 1999.
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